British PM Cameron eyes jet deal ahead of India trade trip

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Last Updated: Fri, Feb 15, 2013 20:31 hrs

By Andrew Osborn

LONDON (Reuters) - British Prime Minister David Cameron will arrive in India on Monday to try to win new trade and investment in the face of fierce global competition, hoping New Delhi may change its mind and choose the Eurofighter over France's rival Rafale jet.

Making his second visit to India as prime minister, Cameron's trip comes days after a similar trade promotion mission by French President Francois Hollande, underlining how Europe's debt-stricken states are competing with one another to tap into one of the world's fastest-growing economies.

The timing of Cameron's trip is not ideal. India said on Friday it wanted to cancel a $750 million deal for a dozen helicopters made by AgustaWestland, the Anglo-Italian subsidiary of Italy's Finmeccanica, over bribery claims.

That will not make Cameron's job of persuading India to buy more civil and military hardware any easier.

But at a time when Britain's government is struggling to get its own economy growing, officials see India, which is projected to become the world's third largest economy by 2050, as a strategic partner whose success could help the British economy grow in the decades ahead.

Cameron will remind the Indian government that the Eurofighter jet - which is partly built in Britain - remains an attractive option if New Delhi decides to review its multi-billion dollar deal to buy 126 French-made Rafale fighters.

A British government source said on Friday that London had noted that Hollande had not finalised the Rafale fighter jet deal during his own trip.

"Hollande was in India this week and a deal has not been signed so we will want to find out from the Indians how their talks are progressing with the French," the source said.

An official from Cameron's office suggested the Eurofighter offer remained on the negotiating table.

"We respect the fact that the Indians have chosen their preferred bidder and are currently negotiating with the French. (But) of course, we will continue to promote Eurofighter as a great fast jet not just in India but around the world."

COLONIAL PAST

Cameron's visit to India, a country that won independence from Britain in 1947 and whose colonial history remains a sensitive subject for many Indians, will last from February 18 to February 20 and take in New Delhi and Mumbai.

Cameron says the two countries enjoy a "special relationship", a term usually reserved for Britain's ties with the United States, but it is a relationship undergoing profound change. For now, Britain's economy is the sixth largest in the world and India's the 10th. But India is forecast to overtake its old colonial master.

TATA group, an Indian company that owns car maker Jaguar Land Rover, is now Britain's biggest employer in the manufacturing sector and, in a nod to how the relationship is evolving, London will stop giving India foreign aid after 2015.

Cameron will be accompanied by a large business delegation, which one of its participants told Reuters was the biggest trade mission of its kind since the 1970s. Another big trade mission in 2010 failed to yield the gains Cameron had hoped for.

He is expected to lobby India to open up its economy to foreign investment to allow retailers, such as Britain's Tesco, to open outlets there amid frustration that many of the sectors where British business excels remain partly or fully closed to foreign investors.

India is forecast to spend $1 trillion in the next five years on infrastructure and Britain is hoping its firms may win some of those contracts. Britain is also keen to persuade more Indians to study in the UK.

Some of its companies have also run into problems. Mobile phone operator Vodafone has repeatedly clashed with the Indian authorities over taxes, oil company Royal Dutch/Shell has asked the British government to raise a tax dispute it has with India during Cameron's visit, and energy giant Cairn has faced problems too.

Cameron's aim is to double trade between the two nations from 11.5 billion pounds in 2010, when he last visited, to 23 billion pounds in 2015. Officials say that goal remains on track and that bilateral trade rose by around 23 percent in 2010 and 2011.

Cameron is expected to meet Manmohan Singh, his Indian counterpart, and may also have talks with President Pranab Mukherjee as well as with Sonia Gandhi, chairperson of the ruling Indian National Congress party. (Editing by Pravin Char)